Nexus 7 Teardown Reveals $152 Material Cost

There was a lot of discussion about whether or not Amazon was making or losing money on each Kindle Fire it sold when the device first launched, and with Google recently introducing its Nexus 7 tablet, many are wondering if Google is in the same boat. Based on a preliminary teardown analysis by IHS iSuppli, it appears Google and Amazon are employing a similar strategy in the 7-inch tablet space, with only about $20 separating each one's respective slate.

Google's 8GB Nexus 7 retails for $199 but costs $159.25 to build, which includes $151.75 for parts and another $7.50 attributed to manufacturing costs, according to IHS iSuppli. The 16GB version costs $166.75 to build ($159.25 for parts, $7.50 to manufacturer).

By comparison, Amazon's 8GB Kindle Fire costs $20 less at $139.80, which breaks down to $133.80 for parts and $6 earmarked for manufacturing.

"Google’s Nexus 7 represents less of an attempt to compete with Apple Inc.’s market-leading iPad, and more of a bid to battle with Amazon’s Kindle Fire," said Andrew Rassweiler, senior director, teardown services for IHS. "The two platforms are similar in many regards, including the use of the 7-inch display, the eschewing of 4G wireless connections in favor of Wi-Fi, support for virtually identical battery lives and the same pricing for the entry-level models. However, the Nexus 7 has superior specifications to the Kindle Fire, giving it a more attractive feature set that may make it more desirable to consumers."

If competing with the Kindle Fire, the Nexus 7 stands out with a higher resolution display using in-plane switching (IPS) and a quad-core processor, along with an embedded camera and near-field communications (NFC) chip, all of which Amazon eschewed in its tablet.